Uncertainty over quarterly tax returns

14th January 2016

The incoming legislation requiring small businesses to digitally submit their information quarterly will lead to previously compliant individuals becoming non-compliant, according to The Low Incomes Tax Group (LITRG).

The tax group is concerned that smaller businesses run by non-digital literate owners or those who do not keep up to date with their tax records may face sanctions from HMRC due to not meeting the new quarterly requirements.

The most at risk from failing the new system include older and disabled people, and those living in remote areas.

Andrew Tyrie, chairman of the Treasury Select Committee, has written to the Treasury seeking assurance that businesses will not be compelled to pay tax any earlier than they do now, and that adequate arrangements will be made for businesses that do not use computers.

The proposals require businesses and individual taxpayers to move from annual to quarterly online tax reporting by 2020. The proposals will also include plans for all taxpayers to be using digital accounts, with HMRC information automatically upload.

Anthony Thomas, LITRG chairman, said:

“It is very harsh that small businesses with the lowest profit margins may be required to undertake significant investment and training in computer technology simply in order to comply with HMRC’s reporting requirements, and for no other purpose.”

John Allan, national chairman for the Federation of Small Businesses, added:

“The UK’s self-employed will particularly struggle with this change. We therefore want to see proper consultation with business groups and professional bodies, a clear statement of benefits to the business community and a package of support to help offset this new burden on business."